Mining Sector Under Pressure, Indonesia Seeks Ways to Retain Investors
JAKARTA — Indonesia’s mining sector is expected to continue facing pressure throughout 2026, even as the national economy maintains its growth trajectory. Amid surging production costs and global uncertainty, the government has begun seeking new formulations to balance state revenue with investment sustainability.
In the first quarter of 2026, the mining sector recorded a year-on-year contraction of 2.14 per cent. This figure made mining the only major business sector that failed to grow while the national economy expanded by 5.61 per cent.
Edi Permadi, a professional expert in natural resources at Lemhannas RI, assessed that the current pressure on the mining sector is no longer merely influenced by ordinary commodity cycles. “The contraction was triggered by a combination of domestic policies and global dynamics,” Edi stated in his analysis.
According to him, the pressure stems from the increase in progressive royalties since 2025, the implementation of the latest Mineral Reference Price (HPM) in April 2026, and the oversupply of nickel in the global market.
The pressure is also being felt by the nickel processing industry based on High Pressure Acid Leaching (HPAL). The price of sulphur has risen from approximately US$275 per tonne (around Rp 4.5 million) to between US$960 and over US$1,300 per tonne (around Rp 15.8 million to Rp 21.4 million). Meanwhile, sulphuric acid prices have reached US$800–$910 per tonne (around Rp 13.2 million to Rp 15 million). These conditions have pushed the production costs of Mixed Hydroxide Precipitate (MHP) close to nickel prices on the London Metal Exchange (LME), resulting in extremely thin or even negative industry margins.
On the other hand, the government is also restricting production through quota policies. Coal production for 2026 has been lowered compared to the previous year, while nickel production is being controlled to maintain price stability.
The Minister of Energy and Mineral Resources, Bahlil Lahadalia, stated that the government has temporarily suspended plans to impose export taxes on several mining commodities while searching for a more balanced new formulation. “We have agreed to suspend it temporarily while seeking a good formulation,” Bahlil said in Jakarta on Wednesday.
He added that the government aims to protect national interests while ensuring the sustainability of business operators. “We must prioritise the interests of the state as well as the interests of entrepreneurs. It must be mutually beneficial,” Bahlil said.
Minister of Finance Purbaya Yudhi Sadewa noted that government discussions are also directed towards strengthening non-tax state revenue (PNBP) from the oil, gas, and mining sectors. “We are discussing plans to strengthen PNBP from the oil and gas sector. I think the plan is quite good,” said Purbaya.